Housing stress hits young people hard

Young people are bearing the brunt of Australia's high real estate costs and are much more likely to encounter "housing stress", according to new research.

One in five Australians aged 15 to 24 spend more than 30 per cent of their income on rents and mortgages, compared to just one in 10 for the overall population, the National Centre for Social and Economic Modelling has found.

Monash University student Hiba Casablanca pays around half of her weekly income on housing costs for her shared student house in Melbourne.

Ms Casablanca, who works part-time at the university and receives youth allowance for study, said the expense siphoned off money she would otherwise spend on other living expenses.

“I definitely struggle at the start of the month when my rent is due,” said the 24-year old. “I forego food, entertainment, clothing."

Her housemates understood because many of them had to cut back on expenditures to make up the shortfall between their income and housing costs as well, she said.

Cutting back on spending

University students, young people living away from their parents, or youth transitioning from foster care faced twice the risk of finding themselves in a form of housing stress than the general population, according to Australians for Affordable Housing.

“Housing stress puts thousands of young people on the brink of financial crisis every single week,” said Sarah Toohey, campaign manager for AAH.

She said the housing, welfare and community sector organisations that back AAH said that it wasn't uncommon for university students to dramatically cut back on spending for clothes, food, even for medical care because of rental and mortgage costs.

AAH, which commissioned the research, defined “housing stress” as occurring for those among the bottom 40 per cent of households by earnings that pay more than 30 per cent of their income for housing.

For someone in the lowest 40 per cent of the population in terms of income, a 30 per cent cost did not leave room for much else, said AAH director Toohey.

"For example - Youth Allowance for a young person living independently is $201 per week plus a maximum rate of rent assistance at $60 per week giving a total income of $261 per week.

"If you could find a place to rent at 30 per cent of that income (which is $78 per week - and I suspect you can't) - you'd have just $26 a day to live on.

"Most people paying market rents would end up living on less than that," she said.

Underscoring the difficulties, three out of four Youth Allowance recipients receiving rental assistance were still in housing stress after they received the payment, said Ms Toohey.

“With so many young people in housing stress and locked out of the housing market altogether, future generations desperately need state and federal governments to fix our broken housing system,” said Ms Toohey.

Australia's housing market, considered among the priciest in the world, has driven up the cost of living and the cost of doing business in capital cities where the bulk of the population lives.

More casual work

While Australia's unemployment rate remains a low 5.2 per cent, the growth of part-time and casual work has become a defining characteristic of the labour market in recent years, particularly for younger and low-skilled workers.

Using data from the Australian Bureau of Statistics, the Australian Council of Trade Unions said that 21 per cent of people aged 15-19 were casual workers, while just under 60 per cent were under 35 years old.

Casual workers were highly represented in industries that rely on younger workers, the ACTU said, with young people making up 65 per cent of accommodation and food workers, and 40 per cent in retail.

The larger trend of a casualised workforce, which has gradually shaped the labour market, resulted in 32 per cent of financially stressed 24-year-olds in full-time study asking families for financial help in 2007, while 8 per cent went without meals, according to data from the Foundation for Young Australians.

Of those financially stressed, 12 per cent had to borrow money to live on, while 14 per cent said they couldn't pay some bills, the FYA said.

Last year, the Australian Bureau of Statistics calculated that about 1.3 million workers aged 15 or older not in the workforce wanted more work.